CVP and Sensitivity Analysis (Single Product). Victoria, Inc., has annual fixed costs totaling $240,000 and variable costs of $6 per unit. Each unit of product is sold for $30. Victoria expects to sell 12,000 units this year (this is the base case).

Required:

1. Find the break-even point in units.

2. How many units must be sold to earn an annual profit of $100,000? (Round to the nearest unit.)

3. Find the break-even point in sales dollars.

4. What amount of sales dollars is required to earn an annual profit of $140,000?

5. Find the margin of safety in units and in sales dollars.

6. Prepare a contribution margin income statement for the base case.

7. What will the operating profit (loss) be if the sales price decreases 30 percent? (Assume total sales remains at 12,000 units.)

8. Go back to the base case. What will the operating profit (loss) be if the variable cost per unit increases 10 percent? (Assume total sales remains at 12,000 units, and round to the nearest cent where appropriate.

51. CVP and Sensitivity Analysis (Single Product) a. The break-even point in units is calculated as: Break-even point in units units b. The target profit point in units is calculated as: Target profit in units = 14,167 units (rounded) The break-even point in sales dollars is calculated as: c. Break-even point in sales dollars - 51. CVP and Sensitivity Analysis (Single Product) (continued) f. Contribution margin income statement for base case: Sales Variable costs Contribution margin Fixed costs Operating profit units) units) g. Start by calculating the new sales price New sales price- x %decrease) Then, prepare a new contribution income statement reflecting the change Sales Variable costs Contribution margin Fixed costs Operating loss units) units) (S 60,000 h. Start by calculating the new unit variable cost: New unit variable cost- % increase Then, prepare a new contribution income statement reflecting the change Sales Variable costs Contribution margin Fixed costs Operating profit units) units)